Letter to the full Senate Opposing the Ryan House-passed Budget

May 24, 2011

Dear Senator:

On behalf of the 3.2 million members of the National Education Association (NEA), we urge you to VOTE NO on the House-passed FY12 Budget Resolution, scheduled for floor consideration in the Senate this week. By choosing Wall Street over Main Street, this budget will result in more joblessness for the middle class and more tax breaks for the wealthiest in our country. In fact, according to the Economic Policy Institute, the proposed budget would result in roughly 900,000 jobs lost in 2012 and roughly 1.3 million jobs lost in 2013 -- in an economy already 11 million jobs short of reaching pre-recession unemployment rates. The middle class continues to struggle to find work, pay more for health care, and worry about their children’s education and future. Seniors continue to worry about their retirement security. Yet, by providing rhetoric rather than solutions, this budget proposal budget leaves struggling middle class families to fend for themselves.

Attached for your information are several charts comparing the cost of tax cuts for the wealthiest ($1 trillion over ten years) with that of providing Title I ($476 billion to fully fund Part A), special education ($306 billion to meet the federal governments promised level), and Pell Grants ($544 million to increase the maximum award by $400 a year) to those in need.

Votes associated with this issue may be included in NEA’s Legislative Report Card for the 112th Congress.

Educators understand that Congress must work to ensure America’s long-term economic prosperity. And, we recognize that we must address the nation’s serious fiscal challenges. However, we do not believe that cutting education funding and slashing programs that serve children, the elderly, and working families is the answer. The sad truth is that this budget proposal is not for the children, the working families, or the seniors. It is for the wealthy. It is a reflection of dangerous choices that threaten our future by devastating whole segments of the population while catering to those least in need of attention and support.

The gap in income growth between the richest and the poorest American families is staggering. According to the Economic Policy Institute, between 1979 and 2005, households at the bottom fifth of the income scale have seen an average, inflation-adjusted income growth of just $200. Importantly, that does not represent an average annual increase in income of $200, but rather, an increase of $200 over the entire 26-year period. By contrast, a small number of households at the top 0.1% of the income scale saw average income growth of almost $6 million over that same period. This budget proposal will only exacerbate this unacceptable imbalance.

It is unconscionable to expect children, the elderly, the poor, and the disabled to bear the brunt of the pain while sparing the wealthy corporations and greedy CEOs. The single largest contributing factor to the deficit is the tax cuts enacted under the last administration and renewed in 2010. It cost our nation $700 billion to extend the tax cuts for single filers earning over $200,000 a year and joint filers earning over $250,000. CBO numbers show that by the end of this decade well over half of the deficit will have resulted from these tax cuts, and this share will continue to grow after that.

The increasing erosion of the corporate tax base has brought us to the point today where, measured by either corporate taxes as a percentage of GDP or corporate taxes as a percentage of overall tax revenues, the US ranks substantially below other OECD nations. As many as two out of three US corporations paid zero in federal income taxes over much of the previous decade, according to the GAO. The share of federal revenues coming from corporate taxes has shrunk by two-thirds in the last fifty years. This is seriously undermining our ability to make the necessary investments in education that are sorely needed in order to return our nation to prosperity. We should be looking for ways to increase revenue responsibly and to close tax loopholes that do nothing to strengthen our economy.

For example:

We could raise an estimated $200 billion in annual additional revenues by ending or reducing the practice of “deferral” that allows corporations to set up mailboxes overseas and to shelter profits.

We could increase revenue by ending the “carried-interest loophole” that allows hedge fund managers to be taxed at the 15 percent capital gains rate rather than their marginal income tax rate.

Investing in education should be a top priority for the budget resolution. Yet, the proposed budget all but ignores proven education programs, and focuses instead on slashing critical student financial aid and funneling taxpayer dollars to private schools. This is shortsighted policy that will jeopardize our students’ future and the future strength of our nation. Investing in education makes both good fiscal sense and good public policy. In addition to widespread productivity increases, the higher earnings of educated workers generate higher tax payments at the local, state, and federal levels. Consistent productive employment reduces dependence on public income-transfer programs and all workers, regardless of education level, earn more when there are more college graduates in the labor force. (Education Pays, The College Board, 2007).

We strongly oppose provisions in the budget proposal that would undermine efforts to improve education, as well as those that would harm those who can least afford cuts to the programs on which they rely. Specifically, we oppose:

Cutting non-security discretionary spending below 08 levels and freezing it at that level for five years. The bulk of the 10-year deficit reduction comes from cutting non-security discretionary spending – a devastating blow to children, working families, and our most vulnerable populations. In fact, function 500 (Education and Training) is cut by $17.7 billion or more than 18 percent in FY12 and by $250 billion over 10 years. Our nation’s economic strength and future success depend on our ability to innovate, educate, and compete in the global marketplace. Failing to invest when investment is called for is a plan for permanent austerity, not long-term success.

Dismantling health care for children, the poor, disabled, and elderly by turning Medicaid into a block grant program. The block grant proposal would cost states and the federal government more money due to cut backs and limits on health care services for Medicaid beneficiaries. It is clear that the proposed changes to Medicaid would put additional pressures on stretched state budgets and would, therefore, have a direct, negative impact on the resources available for students and schools. Heritage Foundation analysis forecasts reductions in federal Medicaid grants to state and local governments of $966 trillion over ten years, and additional cuts in aid to state and local governments of twice that amount – another $1.85 trillion over ten years. This combined revenue loss of $2.8 trillion will put in extreme jeopardy state and local governments’ ability to provide education, health and all services their citizens demand and depend.

We are also deeply concerned about the impact of this proposal on the students in our schools. Of the 68 million people covered by Medicaid in 2010, half are children under the age of 19, whose families depend on Medicaid for health care coverage. One-third of all children in this country are served by Medicaid. Children who lack access to health care services are less likely to come to school healthy and ready to learn and to succeed academically.

Cutting Pell Grants. Maintaining and increasing Pell Grant awards is critical to ensuring access to higher education. Cutting Pell Grants is not the answer to balancing the budget. It simply restricts access to the higher education so essential for success in today’s economy. Without the federal commitment to student financial aid, there will not be enough educated, skilled Americans to sustain economic recovery or secure our nation's future for the next generation.

Extending the District of Columbia Voucher Program. It is wrong to funnel millions of taxpayer dollars to private schools while cutting programs that help millions of students in public schools. The DC program has yielded no evidence of positive academic impact on the students the program was designed to assist – those attending schools been designated as needing improvement. The program also has been proven to have no impact on achievement in mathematics, no impact on male students, no impact on students entering the program in the second year of its existence, and no impact on those students who scored in the lower third of baseline reading tests; i.e., those most in need of assistance. (The Evaluation of the DC Opportunity Scholarship Program: Impacts After Three Years, http://ies.ed.gov/ncee/pubs/20094050).

Vouchers are not real education reform. Pulling 1,200 children out of a system that serves 65,000 doesn’t solve problems – it ignores them. Our focus should be on strategies proven to increase student achievement, such as increasing parental involvement, strengthening teacher training, and reducing class size. And, our goal should be to prepare all students for the jobs of the future, not to allow a few students and parents to choose a private school at taxpayer expense.

Converting Medicare into a voucher system. Contrary to the rhetoric surrounding this proposal, beneficiaries would likely find that their voucher would not allow them to purchase a package of benefits comparable to that which Medicare now provides, since traditional Medicare generally pays less to providers and incurs lower administrative expenses than private insurance. In addition, insurers would be allowed to charge older and sicker Medicare beneficiaries higher premiums and would surely attempt to reject enrollees in poor health (who cost much more), as private plans do today in the Medicare Advantage program.

The Ryan budget places the burden for addressing the nation’s financial crisis squarely on the shoulders of the middle class and the poor. It runs completely counter to our values as a nation, by failing to take care of those most in need while sparing those at higher income levels. It asks children, working families, elderly, and disabled populations to make greater sacrifices than others. It is time for Congress to stand up and decide what sort of nation we want to be. Are we a nation that sacrifices our children to pay for the excesses of Wall Street? Or, are we a nation that recognizes that investments in the middle class and those who are vulnerable lift us all up and strengthen us as a country?

NEA also strongly opposes Budget Resolutions that may be offered by Senator Toomey and Senator Paul. The Toomey Budget cuts education programs by about one-third. The Paul Budget eliminates the Department of Education other than Pell grants, which would be cut back to FY 2008 levels.

We urge you to stand up for those whose voices are too often ignored by VOTING NO on these ill-conceived proposals.

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